Japanese exchanges set for merger by autumn next year

TOKYO Stock Exchange (TSE) and Osaka Securities Exchange (OSE) are in the final stages of talks to merge, with the aim of combining forces in the autumn of 2012.

Under one likely scenario being discussed, the unlisted Tokyo bourse would first take a majority stake in the smaller but listed Osaka exchange as early as next spring through a public tender offer, the Nikkei said.

The two would then merge operations and the OSE would remain listed as the surviving entity.

Merger talks between the exchanges began in March with the aim of better competing amid weak stock market conditions in Japan and a wave of mergers and alliances among global exchanges.

The two have complementary strengths, with the Tokyo bourse controlling more than 90 per cent of cash-equity trading volume in Japan and the Osaka exchange the top player in Nikkei index futures and other derivatives.

The head of the Tokyo exchange, Atsushi Saito, who originally said he wanted to list it before a merger, said last month that avoiding an initial public offering might speed up the process.